Irish Gov’t Aims to Maximise Level of Exploration Activity

Irish Minister for Natural Resources, Fergus O’Dowd, yesterday announced the timing and outline of the next Atlantic Margin Oil and Gas Exploration Licensing Round. The full detail of the Round will be announced after a review of oil and gas fiscal terms is complete in early 2014.

The Round is scheduled to open in April 2014 and will close in September 2015. It will include all of Ireland’s major Atlantic basins, and the form of licence on offer will be a two year licensing option.

Speaking at the Atlantic Ireland Conference in Dublin this morning, Minister O’Dowd highlighted the increased interest in the oil and gas potential of the Irish Offshore.

“It is a fact that Ireland competes for mobile exploration investment in the same way it competes for Foreign Direct Investment in already established onshore sectors,” said Minister O’Dowd.

“The Government’s strategy for the exploitation of the State’s natural hydrocarbon resources aims to maximise the level of exploration activity and increase the level of production activity, while ensuring a fair return to the State from these activities.

“It is important then that the State provides suitable opportunities for international investors and provides the right environment to encourage industry to take the risk associated with investing in exploration.”

The Minister indicated that the details of the forthcoming Atlantic Margin Licensing Round would not be finalised until after a review of oil and gas fiscal terms is complete in early 2014.

“Minister Rabbitte and I have announced that we are seeking further independent expert advice on the “fitness-for-purpose” of Ireland’s fiscal terms.

“Such expert advice will focus on what level of fiscal gain is achievable for the State and its citizens and, also on the mechanisms best suited to produce such a gain.

“It is intended to bring consideration of this matter to a conclusion in the coming months. This will ensure that the next licensing round can be launched against a backdrop of regulatory certainty and encourage new investment in exploration.”

The Minister welcomed the recent entry into the Irish Offshore of the large independent oil companies Cairn, Kosmos and Woodside.

He noted that applications had been received by his Department to convert 12 of the 13 Licensing Options issued under the 2011 Atlantic Margin Licensing Round to full Frontier Exploration Licences, and that this would result in a step change in exploration activity levels in the coming years.

The Minister commented that “the 2011 Atlantic Licensing Round has delivered on its objectives and the challenge for us now is to build on that achievement”.

In advancing the September 2015 close for the next Licensing Round the Minister stated that “in deciding on the timing of the round, I recognise the value in allowing sufficient time for oil companies to devote resources and commence work on evaluating data, so that they can make strong applications.”

The Minister also indicated that the conditions of the Licensing Round will seek to address the fact that in the 2011 Licensing Round there were large areas in the Irish Offshore in respect of which no applications were received.

Noting that there had been no new commercial discoveries in the Irish Offshore since the discovery of the Corrib gas field in 1996, he stated that “whilst growth in exploration activity increases the chance of commercial discoveries being made it brings no guarantees. What we are witnessing in our offshore is positive and there is a clear forward momentum.

“The Government’s intention is that momentum should be maintained, with the ultimate aim of ensuring that the true potential of our indigenous oil and gas resources will be realised for the benefit of our people”.

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Press Release, November 12, 2013